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South Korea, US Begin Free Trade Talks

Posted June. 06, 2006 07:13,   


Korea and U.S. officially embarked on the first round of FTA negotiations in Washington D.C., U.S., local time 9:30 a.m. on June 5.

Korea`s chief negotiator Kim Jong-hoon and his American counterpart Wendy Cutler, assistant U.S. trade representative, shook hands wishing for successful negotiations at the Office of U.S. Trade Representative (USTR) conference room located in Washington D.C. with Korean and American chief delegates of 17 sectors.

Nevertheless, the air in the room was tense since delegates would have to protect their country’s interests as much as possible.

Occupy the Higher Grounds First—

From day one, the negotiation teams of both countries engaged in a tight war of nerves.

Choi Seok-young, the economic attaché of the Korean Embassy in the U.S., said, “The U.S. has a wide understanding of all of Korea’s internal situations.”

The Public Affairs Section of the U.S. Embassy in Seoul reportedly translates all Korean media reports related to the ROK-U.S. FTA and sends them to the U.S. Department of Commerce and the USTR.

On the same day, USTR expressed discontent over Korea disclosing the draft agreement between both countries and briefing how the first round of negotiations proceeded. Their argument is that when issues under negotiation are disclosed, it might cause unnecessary misunderstanding.

On its part, Korea has conducted prior preparation work so that the U.S. Congress would not have negative views on issues related to the FTA.

Economic Attaché Choi said, “Since the start of FTA negotiations was declared in February, Korean Ambassador Lee Tae-sik has met over 100 congress members and persuaded them.”

Stop Negotiations vs. No Exceptions to Opening Market—

Around the time of the initiation of negotiations, there was a stampede of pressure from all types of interest groups and civic groups.

On June 4, local time, about 40 members of the demonstration team who came from Korea to the U.S. to oppose the FTA linked up with about 100 anti-globalization, anti-war and Korean-American group members in the U.S. and held rallies and demonstrations demanding the halting of negotiations in spots such as roads and parks adjacent to the World Bank, IMF and USTR.

While the demonstration continued, Washington D.C. police led the march with a patrol car in front of the crowd, and the demonstration proceeded as agreed with the police so there was no confrontation.

In contrast, U.S. businesses tightly bonded together and argued that the conclusion of an FTA should leave no exceptions.

Meanwhile, AMCHAM and the U.S.-Korea Business Council published a “ROK-U.S. FTA Policy Report” and argued that both countries should engage in comprehensive negotiations based on the free trade system of WTO.

U.S.-Korea Business Council President Myron Brilliant demanded, “The Korea-U.S. FTA should comprehensively deal not only with opening service sector such as communications, finance, and legal service, but also trade of agricultural products.” He also requested the abolishment of Korean tariffs on American agricultural products and automobiles.

He added, “A promise from the Korean government that it will work to eliminate negative opinion toward imported cars is also necessary.”

Five Hot Issues That Include Gaesong Complex and Agricultural Products—

The Korean negotiation team considers five issues to be the hot potatoes of negotiations. These are recognizing Gaesong Industrial Complex products as that of Korean origin, excluding extremely sensitive agricultural products such as rice from negotiations, opening service sector such as financial and legal services, demands to improve Korean laws and systems related to automobile taxes and drugs, and the U.S.’ measures to protect its own domestic textile market.

Both countries plan to organize issues that can reach a possible compromise during the first round of negotiations into a single draft, while issues in which the positions of both sides are too incompatible will be created into a combined agreement that carries both sides’ demands, which will be used as material for the second round of negotiations.

Nevertheless, the draft agreement exchanged between both countries on May 19 showed quite some dissent; hence it is doubtful whether many single drafts will emerge from these negotiations.

In particular, Korea adamantly stated that it could never open the sensitive agricultural products market, which includes rice, and that it cannot revise automobile taxation based on engine size.

The situation does not look bright since the U.S. is adhering to the position that it cannot accept Gaesong Industrial Complex products as that of Korean origin and persists to protect its domestic textile market.

Economic Attaché Choi commented, “The draft agreement is where everybody makes their highest demands. There is no need to pessimistic or optimistic at every single detail of the draft.”

Keuk-In Bae bae2150@donga.com